Archive for October, 2010

Nelson Linden has once again posted some economic statistics: The Second Life Economy in Q3 2010. This is a more detailed reply to that posting in the SL forums. I’d love to believe that someone reads it, gets it, applies something from this, even just a part of it. And I don’t think there is anything special here, except a bit of common sense and compromise, two things that seem to be missing from SL lately, so I have to say it “out loud”.

It is true that I am less engaged with Second Life now, so why should I be so interested in how it is doing? Like any good Canadian, I recognize the massive sphere of influence my big neighbour to the south projects on my world. Similarly, Second Life is the reference model by with other virtual worlds are measured and compared. For now, at least. Also, repeated failures in Second Life tend to create waves of emigrants, looking for an alternative, which directly impacts my virtual (and real) existence. Other virtual worlds really aren’t yet ready for an exodus of even 5% of Second Life residents. In time it will be viable, and although there is still a tremendous amount of work to be done, I feel that this time next year, InWorldz will be kicking SL’s performance and scalability butt, I think at this point most worlds would like to see a nice steady trickle, but no significant flood, yet.

Flat – Like An Empty SimLast month, I posted an article discussing “Second Life Growth, Land and Economy“. Last time, the word Linden Lab used to describe Second Life was “stable”. This time, “steady”. Although it’s clear that in some cases, it continues to decline slightly.

As I said in my previous article, these words are great euphemisms for “flat”, which in the online gaming and social networking worlds really means “dying”. You are either growing, and quickly, or you are dying and soon to be replaced by The Next Big Thing.

Yes, something needs to be done. They need to keep watering the flowers, and stop the weeds from ruining the view(er).

The NumbersOnce again they have changed the measurements collected, which makes trend comparisons awkward at best, but fortunately the new numbers reported include comparisons with previous values, chosen by Linden Lab. From my perspective, important numbers are shrinking, the dangerous numbers are growing.

Active economic participants fell 1.0% from Q2 and year over year.

LindeX volume in Q3 fell 3.8% from Q2 and 2.8% from Q3 2009. With fewer economic participants, there was less need to replenish L$ balances from the LindeX.

Hmm. Participants dropped 1%. Yet trading volume dropped 3.8% this quarter, and 8.2% over the last two quarters.

Total sales volume on both Xstreet SL and the new SL Marketplace rose 8.5% from Q2 and grew 115.2% year over year.

Yes, activity outside Second Life is growing dramatically, setting new records. As I blogged previously, I’m sure Linden Lab sees this as a Good Thing. (More below.) To me, it’s a failure to recognize that your biggest strength is the people, in-world, in the environment that differentiates your product from others. Or at least, a failure to cap the leakage away from that in-world activity. Stop the leakage: 115% increase in outside-world volumes is a Bad Thing!

User Hours fell 3.7% from Q2 and 11.0% year over year.

User hours have dropped about 10% over the last two quarters (116 million down to 105 million).

The most significant quarter-to-quarter loss of user hours was from the heaviest usage segment (accounts logging over 300 hours per month).

So the oldbies are starting to lose faith. Or at least the ones who have been spending the most time online, the most die-hard addicted SL residents, no longer are such die-hard addicts. I would imagine that these are more likely to be the store owners, the landlords, the content creators, and those others most deeply invested in SL.

I’m not surprised. If the current trends continue, we will only need welcome centers. SL will be nothing but newbs standing around, barking at each other, finding creative new ways to grief each other for the lulz. Plus the new kids playing Farmville 3D without even known SL exists, or that they might be able to build something, or buy something other than seed and barn materials.

It Doesn’t Have To Be This WayLinden Lab, you can have it both ways. You can promote SL to new users through new incentives for the social networking folk, while keeping the existing long-time residents happy just by throwing them a bone once in a while and really listening.

You can introduce catchy new viral mini-games within that include recurring revenues, and you don’t have to narrow that to one brand of bunnies. Instead, grow the whole industry or genre, the whole category of mini-games within, become THE platform for a richer experience of social and building mini-games. Second Life would make an excellent platform for “Farmville 3D”. As well as “Farmtown 3D”, “Farmers ‘R’ Us”, Cornfield USA”, and “Eurocrop 2011”. As well as Vampires 3D, Mobsters 3D, and anything else you can find weaker examples of on an iPhone.

Recognize that it does not really matter how a virtual world is used, as long as it is used, and that the users feel it is worth their online time.

You don’t have to replace the existing user base, or abandon the dream of providing that rich content experience for all, a place where dreams can become reality. The existing user base can be the very foundation for providing those millions of new users with a richer environment than just the one mini-app they entered the world to use, because their schoolmate like it and wanted company.

Provide The Structure – Let The Others Decorate The WallsThose mini-apps need not come from Linden Lab. Apple is doing quite well providing the platform and the app store. They don’t need to write every app too. You can let the third-party developers do all the work providing these mini-worlds within, while taking a cut on all sales and currency purchases, as well as an increasing number of regions for supporting this, growing the economy overall as well. It’s a feedback loop and the more you provide, or indirectly provide through enabling others, the more new residents will enter, the more existing residents will be retained.

And while letting the others do the work for this, you can fix the underlying base technology, and turn Second Life into the platform of choice. Making teleports reliable, fixing fundamental issues with rezzing and assets, retaking control of the script engine from MONO so that performance is not impacted, fixing the bottlenecks so that regions properly scale to hundreds of users.

Bring Them HomeYou can stop pushing user activities outside of the in-world environments. Promote in-world shopping, building, and editing by removing the need to do so much outside SL. First and foremost, fix the in-world search so that the results are not skewed to completely useless by bots (traffic) and bribes (paid ads). Dedicate development teams to implement in-world editors for animations, mesh editing, and maybe even clothing design (painting). You did an amazing job on providing prim-based builders the masses can access. Replicate that same success with the rest of the core functionality…

If you build it, they will come. Entering the social networking world requires good support from word-of-mouth; if you pepper them with ads and browser plugins, push content creators outside your world, and alienate the millions of existing users who have invested heavily in this world, it will fade away and die. Treat the residents with respect and given them reason to participate and to believe and they will grow as in previous years.

A Beautiful Garden? Or a Modern AtlantisI am saddened by the deep feeling that, now that Second Life has become a huge success, the huge potential there is being needlessly thrown away by those managing it. The difficult part — attracting millions of residents — has been huge success. Just cultivate the great achievements already recognized, and water them, and watch it all grow.

Feed it, grow it, and worry less about what it grows into, and more about whether it is growing at all. And stop trampling on the flowers! Otherwise we may find whole worlds lost, and forgotten, at the bottom of the ocean.

A Change of AttitudeTo date, I’ve been pretty bitter about feeling almost forced out of Second Life by the grid owners, Linden Lab. Their frustrating policies, seemingly needless interference in residents’ businesses, sometimes infuriating support, stale scripting APIs, and unreliable basics (teleport, rezzing objects, etc) after four years there.

Generals and SoldiersI’ve been a professional server developer for 27 years. I’ve seen a lot of technology come and go, but until now, I’ve mostly seen these as independent, unrelated systems.

So in this industry, I am a specialist, a soldier, not a general. I don’t mean that from a leadership point of view, but more that I don’t see things in a macroscopic way, but rather… I fix bugs, I do specific things. I have to stay focused to get that done. I look at Second Life and I see Second Life. I look at InWorldz and see something entirely different.

Others, the generals looking over the battlefield — or since they don’t really command anything here, the generalists — might see each of those as one glass of water in a raging river. I don’t know if that is what she intended, but thanks to Miso, I see the river now too. I see how much work it is to try to change the direction of the river, and how unnatural that attempt might be. I see that maybe the best approach isn’t to try to dam that flow, or to try to redirect it, but maybe the best approach is to build a boat, and go with the flow. To ride the wave, where ever it might take us. And to smile and enjoy the ride.

The Common ElementThere is a bigger picture here. The river started with a trickle from BBS systems of the past, CompuServe, the various online game environments like Battlefield, The Sims, World of Warcraft, and even more recent ones like Crime Craft and Star Fleet Online. And of course Second Life, InWorldz, and other open-ended multi-purpose environments.

There is one thing they have in common, regardless of the technology being used, or the features being offered. It’s the people. The users, or as we like to call them, the residents. The platforms are really just the preferred tool-du-jour, used by those residents.

The Troublesome Teenage Years of Online CommunitiesIn the grand scheme of things, the online world is relatively new. When I started as a server developer, it did not even exist (unless you were at a university where the foundations of the Internet played an early role). I remember discussing with my bosses whether we should support the TCP/IP connections and the Internet , or whether we felt that the Internet was a fad that would soon pass and be replaced with something newer. Afterall, it was decades old when we were discussing this in the early 90s. Well it caught on. We delayed a bit, to see, but then decided we better jump on board. We decided we better build that ark… the river waters were rising. We later dropped support for modem connections, ISDN, IPX and AppleTalk. And a several connection types that never made it beyond 16-bit environments.

My point here is that it is an industry of change, and while arguably out of infancy, it is still an adolescent. Things change. You roll with them, or you go stale and die. I’m sure that’s where the Lindens are coming from; trying to figure out which new direction to embrace. As I said in my earlier “Second Life: Growth, Land and Economy” blog posting:

They call the economy ‘stable’ — that’s a great euphemism for ‘flat’, which in the online gaming and social networking worlds means ‘dying’. You are either growing, and quickly, or you are dying and soon to be replaced by The Next Big Thing.”

Unfortunately, their new direction appears to be based on breeding chickens. (Just kidding.)

So where do we go from here?We accept that things will change and play along. Ride the wave, caring less about where it will take you, what you leave behind, and instead recognize that at this point in the evolution, it’s not about things and riverside stops, but rather the trip downstream itself, and the friends riding that wave with you.

When it comes to Linden Lab, or any other online service provider or grid owner, look at it purely from the point of view of being customers of a service they offer. And if you want to take advantage of a specific feature of virtual worlds that Second Life does not offer, try a different world, or pick a different target.

So stop worrying or even caring about what the Lindens will do next, and accept that if you are business owner, they will push you over the table and forcibly take you from behind, and they won’t even realize they are doing this. You have two choices: learn to like it or at least accept it, or… stop giving them opportunities for that. Take your business elsewhere, or otherwise change it such that you have removed Linden Labs from the control equation.

I have done this by shutting down my SL businesses. I also returned my regions and abandoned my land. I have a full region in InWorldz for a home, and for a small city where I provide things for free, for fun. My net available monthly funds are way up now. It was just being wasted, and foolishly, before. And if I want to participate in a business environment, I’ll do that in InWorldz, where I know the founders will work tirelessly to provide a stable business environment, even with the tremendous growth they are having to deal with.

Another approach is to simply have fun. I got into Second Life for the more complete simulation of business environments, with real humans as customers, and real US$ as the prize if I did well. I see that was a bit of a mistake now; there are few business types in SL that the Linden Lab will avoid, but I wouldn’t want to try to predict those after the latest intrusion into residents’ businesses. They directly compete with land owners, even those renting small affordable apartments. You would think that making breedable animals in SL would be a safe bet. But now they are directly marketing a single specific brand, to the email mailbox of every resident in SL, with the backing and endorsement of Linden Lab. How fair that must feel to those who have spent months scripting the competing breeding systems. There have been many victims over the years.

So if you are one of the victims, stand up again, brush off the crap, and enjoy. Relax. Have fun. There’s a lot of entertainment in all worlds, from live musicians to amusement parks. Most of it is actually free. And pretty darned good.

It’s A Multiple Choice QuestionYou can also avoid the frustrations by recognizing there is choice. If your cell phone provider wants to charge you for something you disagree with (e.g. incoming SMS messages), shop around. Find a provider that better meets your specific needs. Similarly, if you feel land in SL is too expensive, but you still want a professionally hosted grid that you can just live on, try InWorldz. If you want a more structured game environment, try one of the recent online games. If you just want to chat with your SL friends, ask for their Yahoo/Skype/MSN names. Or whatever… the possibilities are nearly endless.

Also, many people never really consider that they can actually choose more than one environment. All of these environments are just tools, and sometimes the best tool is not the same one you used previously. Maybe your SL business will be entirely web-based. Maybe you will develop and create content on InWorldz, where uploads are free, and land is affordable. And you’ll run that club out of SL where there are still more people. And maybe you will use Skype or Facebook or Twitter to stay in touch with your online friends. And that way, you survive the flood… the raging waters that you cannot control, the waters that wash away your home or business that you built in SL on sand at the edge of the river.

The tools will change over time. The thing is that … what really makes a grid is the residents, not things. The river is going to swell and shrink over time, and change direction when you least expect it. If freedom to go with the flow means you have to give up some things in SL, it’s not the end of the world. It can all be rebuilt, and doing so, and sharing that rebuilding process with your friends, is the fun part anyway.

Chillax: In The End, It Really Just Doesn’t MatterAt this point in time, I’m firmly planted in InWorldz. But I see that broadening my horizons is a good thing; and I can still enjoy the positive aspects of Second Life. At least as long as it is here. Strangely, I am more at peace now with the idea that everything might poof. Really, the problem with Second Life is that it actually continues to survive; rarely does an online environment last this long. And what to do with it now that it seems to have peaked but then leveled off, and not plunged and died, well that’s what leaves the dilemma — what to do with it now. It’s still here. But it’s not a big deal really. If and when the main grid disappears, other alternatives will either already exist, or will spring up. It’s like if a big boulder rolls down the hill into the stream. There is a momentary disruption, but the water will flow around it; all will continue to be as it should be. Those riding the wave will ride a slightly different course, around the boulder. But the river will continue to flow, somewhere.

The OldbieWhen I saw that Second Life veteran Cubey Terra had posted an article entitled “The Oldbie”, I knew this was going to be an amazing article (or story as it turned out). I am understating this tremendously, but let me just say “well done”. It does expose the fears and frustrations of many.

Two weeks ago, I posted a blog article outlining the reasons why the current Linden Lab-demanded automated ownership checks were inappropriate, even though I spelled their name wrong: “Linden Labs, It’s My Stuff”.

Cubey Terra was already a veteran, now an oldbie, when I started in 2006; I feel that more and more veterans are starting to worry about their content, and that it will take a campaign by new users, veterans and oldbies alike, to encourage Linden Lab to provide a solution for existing content in Second Life.

Conflict of Interest: The Value of Second LifeI think everyone agrees, Linden Lab provided an incredible building environment, where mere mortals could create detailed 3-D worlds, not just skilled and talented artists using more complex tools. But it was the resident users who registered, and created the huge quantities of content, that really led to the success that was Second Life. This leads to a bit of a conflict of interest for Linden Lab: if the current value of Second Life is the users and the content, then who really owns Second Life?

Okay that is simplified; of course Linden Lab owns the environment, the servers providing the processing, and the storage. They pay the staff who provide support (/me bites his tongue), they pay tremendous fees for Internet bandwidth and IT services. They provide the currency and the exchange to real-world dollars. And a lot more.

But… but… all of that is replaceable, the same way that one cell phone carrier or Internet service provider can be replaced with another. What is irreplaceable is the people, and the content these people have created. And of course I’m not referring to Linden Lab staff, Torley’s video tutorials and Linden Homes. I mean the resident users — who in many cases actually pay Linden Lab to be there — and the creations they have made over the years. I’m also referring to the empty regions they have purchased from Linden Lab — at great cost — and designed and developed into amazing creations and in some cases even works of art.

That is where the true value of Second Life lies. That is what Linden Lab must work to preserve now. And not preserve in Second Life, but to preserve in general. And that is where the conflict of interest lies.

Legal ConcernsLinden Lab, wake up. You are exposing your naughty bits to the public. The question is, who owns the content, the SL creator? Or Linden Lab? I am no lawyer, but I feel there are legal issues with someone other than the copyright holder enforcing restrictions on the content against the wishes of the copyright holder. I’m willing to bet that if I checked into this, I would find that that unless Linden Lab actually legally owns my SL creations, that Linden Lab has violated my property rights and is ripe for a class-action lawsuit.

So once again, who actually owns the objects I have created in Second Life? Well according to Linden Lab, I own it. All of it. Linden Lab exposes that answer as part of their DCMA process. Clearly they take action under the DCMA acknowledging that my intellectual property has been violated in some way, when I file a DCMA complaint about the Second Life inventory items for which I am the SL creator.

Thank you Linden Lab for conceding that I, in fact, own my SL creations, not you.

Copyright law is a funny thing. As I understand things, once you provide licensed access to a creation, you cannot retroactively restrict that usage, nor can a third party restrict it. The licensing terms are up to the copyright holder, and that holder alone.

I believe there is plenty of room for legal action against Linden Lab, forcing them to allow me to export my own creations, regardless of whether I used an alt to do it, or even generic Library prims or public domain textures or other content that I have permission to use from that copyright holder. Frankly, it’s none of Linden Lab’s business; it’s a licensing matter between me and other copyright holders.

Going ForwardLinden Labs has a responsibility here. Either implement some form of authorized usage by others (e.g. DRM) that allows creators to export their creations for use beyond SL, or perhaps if they do not wish to invest further development effort because there is an end in sight for SL, then perhaps they could just open it up as it was in the past. Really, I think our main concern in that case would be getting banned before all of our own content is exported.

This is yet another example of DRM gone wrong, punishing the legitimate creators to try to enforce some misguided and ill-conceived notion of protecting others.

I can hear the screams of the protectionists, and I can sympathize with those fears. I understand and agree that I would much rather see some form of authorization designation on the part of the creator, but Linden Lab has not provided any means to accomplish that. However, in this case, if the choice is — as it seems — between protecting that content and losing that content, then I’ll take door #2 and go with being able to at least preserve it elsewhere, even if that exposes my content to other nefarious cretins possibly being able to break the law and steal the products. If I was a store owner in RL, this would be akin to not allowing customers to remove products from my store, even when paid for, in order to protect against shoplifting. Do I want to board up the windows on my store to prevent shoplifting? No, that just means that my products will never be enjoyed outside my store. And if it burns down, every single copy of my creations will be lost.

My feeling is that this is best solved the same way that many laws solve this — through a clearly stated policy (laws), and punishment for violations. Punish the shoplifters, not the paying customers. The rights of the creators to use their own products need to trump the rights of other creators to protect usage. In other words, scrap the current feeble excuse for automated DRM tests enforced at the viewer end — that protect nothing, but blocks legit creators and followers of the TOS — and replace them with TOS policy and enforcement, at least until such time as LL can provide something better, something that protects the investment of content creators in SL.

The TOS should clearly state that punishment will be applied when there is a resident who is a victim of content theft. I want to export my own goods. The only victim here is me; a victim of overly harsh TOS that would ban me if I took action to protect my content.

Linden Lab: Pushing Users Out Of Second LifeIf nothing is done to protect my right to export my own creations, and other creators feel similarly, virtually all significant content creation is going to move off-grid, to other grids. And it may not be imported back into SL. That is the case for my work now. I am probably not the only veteran who feels this way.

Furthermore, many of the recent changes (SL Marketplace, mesh import, export restrictions) and some that I only speculate about (interoperability with other social networks, e.g. being able to chat with Facebook users, or voice with Skype users) all lead to one undeniable trend: for more and more Second Life “users” to not actually be logged in to Second Life.

As I said in the “It’s My Stuff” blog posting: “Like flawed in-world searching, this is just another reason to spend all of your SL time… outside SL. And without an in-world editor, meshes will add even more fuel to the “spend your SL time outside SL” fire. It seems that some day I will be able to chat with SL residents from Facebook, or Skype, or Twitter. I won’t need to log in to Second Life to do that. And Linden Lab probably sees that as a good thing.”

It’s true that Philip Rosedale’s return was always billed as an interim position, but it seems it was always promoted as part of the plan to guide the long-term development strategies, and internal and external culture, back “on track”. To restore the original vision, in a new way updated for the changing times. In the hundred or so days while Philip Linden 2.0 was CEO (the second time), it seems the most notable change is his avatar.

Of course, behind the scenes he worked with Bob Komin (CFO) to guide him in his new role as COO, but after the 3+ months of Philip 2.0, we now have a new acting CEO as well. Actually not a new CEO, the same Bob Komin in the new role of CEO. Along with COO and CFO. There are 23 more middle letters for Bob to add so there’s lots of room for growth there.

What concerns me about this is that Philip is leaving before a new CEO has been selected. And, adding CEO to the burden carried by Bob Komin. Almost as if there is a rush to get out… now. There is also the possibility that he simply cares more about, or feels there is a more urgent need at, his position at Love Machine.

I’ve been a professional software developer since 1984. The companies I have worked for have been swallowed up when least expected, slid into a grave when least expected, gutted the entire executive management when least expected, announced layoffs when least expected, etc. I’ve seen just about everything in those 26+ years.

This smells. There is big news coming. I don’t know what it is yet, but it’s coming. My spidey sense has been tingling for some time now, and every week it seems more fuel is added to that fire.

There are theories that the CFO is now in charge because of a pending acquisition of Linden Lab and Second Life by a bigger fish. That’s possible, but the departure of both Philip (Mr. Vested Interest) and Marty (Mr. Mergers and Acquisitions) tells me this is unlikely. I’m going to go out on a limb here and claim that:

I think this confirms that the acquisition speculation is off-base, or whatever interest there was in acquiring LL has now died.

Instead, I feel that what we have here is a product entering “maintenance mode”. This is further promoted by the departure of Catherine Smith, Marketing Director, not to mention the closure of the international offices, and the 33% (and growing) layoffs. My history tells me that the major R&D investment is now over. Totally over. Instead, now begins the process of maintaining the product, just enough to try to preserve the existing customer base. To milk the product for as long as it can draw revenue. They don’t need expensive legal counsel now: exit Marty. They don’t need a go-get-em Marketing Director: exit Catherine. They don’t need a wealthy innovative thinker who could do anything, including sit around at home or go camping, but loves to start those new projects “for fun”: exit Philip 2.0.

Heck, they don’t need many of the forward-thinkers and innovators: exit Pathfinder, Babbage, even Qarl. They just don’t need people like Cyn and Pink and Alexa and Soft Linden, and so many others in The New Virtual World Order.

What they need is someone who can guide the financial numbers and continue to provide some form of ROI for investors, and to maximize what remains. They need a CFO, in charge of the boring day-to-day, from a financial perspective. Oh look, first Bob Komin is made COO… and now BK is acting CEO. Thus begins the milking. But I doubt that is where BK wants to be. So stay tuned for more news to come.

The flaw in this theory is that strangely Mark Kingdon (a.k.a. M. Linden) may still belong there, if this article is accurate. However, my theory is that maybe they didn’t know that in June. I get the distinct impression that something changed; that Linden Lab received some bad news that changed their plans. Perhaps the “plan” for Farmville 3D turned sour and Philip and the others have had enough. Perhaps the planned purchase by Microsoft fell through, when the offer came in too low and didn’t climb. Or perhaps it was AOL who they expected to draw attention from and did not.

Supposedly they are looking for another new CEO, and I believe that is accurate. I assume Bob is capable, but they would probably be better off bringing in a corporate “wind-down” specialist. A software farmer who knows how to milk the cow, while reducing feed costs. And I suspect that Bob is better suited growing a new startup, rather than slowing and milking a former software leader. There’s a lot of speculation in this article, but I fully believe that neither Philip or Bob want to preside over the demise of Second Life.

So I predict two more things:

a new CEO will be announced, who will have a mostly financial (or perhaps legal) background, possibly even with experience in the leading the demise of corporations, and

Bob Komin will leave Linden Lab, and move on to a new-ish smaller company with significant growth potential.

In other words, Bob is at the wrong end of the corporate cycle, so he won’t be in that position once they find someone interested in taking the reins.